The Senate is expected to this week vote on a bill that would allow states to force Internet...

The Senate is expected to this week vote on a bill that would allow states to force Internet retailers to collect sales tax. The Senate has already voted 75-24 in favor of a non-binding resolution that backs the idea, helped by increasing support from GOP governors who like the thought of billions of dollars in more revenue. Amazon (AMZN) is in favor of the legislation, although eBay (EBAY) opposes it, saying it will add extra burdens to small businesses.

I would think that internet commerce can facilitate income tax cheating. If that were true, having state tax authorities also keeping an eye on internet businesses might improve the dollars going to Uncle Sam. Mere speculation on my part.

The plan is full of holes:I don't think it will be constitutional to collect taxes at the point of sale in another state. I know the state of Washington got nailed when they tried a bottleing tax on out of state companies selling bottled water destined for the state. The buyer is supposed to pay the sales tax on items purchased out of state. Its generaly volantary, the only place its enforced is on auto purchases. I know some states have agreed to have Amazon charge taxes where Amazon has as significant presence in that state. This does not even apply to all purchases.

The only authority the fed may have is an interstate commerce sales tax. There may be a constitutional question if they try to enforce state sales taxes.

Will the taxes go state by state or city by city? Some of the county and city taxes are high fraction of the local sales taxes.